Reference my telegram 1013. [2]

To sum up position as I see it. This is first time after many
months of discussion that we (i.e. B.C.D. [3] countries as apart
from U.S.) have had anything tangible to work on. We are faced
with a Japanese proposal that is unacceptable in itself but which
with certain amount of modification might be acceptable to Japan
and to U.S., the British Empire and the Netherlands.

My personal feeling (for what it is worth) is that, if these
negotiations fail, war is not far off. Although I hope and believe
United States would be actively at war as soon as Japan were to
make first belligerent move no one can be certain of this because
only Congress can declare war, and Congress is unpredictable. If
present negotiations fail Japan may declare war on United States
and so take positive decision out of hands of Congress but this
may or may not happen. Even though all discussions have been
between United States and Japan, and though United States has been
played up in Japanese press as country that has thrown herself
across track of Japanese expansive ambitions, Japan might quite
well avoid direct attack on United States interests in Far East
and confine herself to attack on British or Dutch interests or on
Thailand, in which case it might be some months before United
States was at war, if then.

There is therefore at least a reasonable risk that we (B.C.D.

countries) may have to bear in first place, at least, the brunt of
Japanese attack if these present negotiations fail. Therefore we
should, I submit, be allowed a considerable say in framing of
redraft of this present Japanese proposal.

If clauses 2, 4 and 5 are to be radically amended as suggested by
Secretary of State [4] then I believe that, in an endeavour to
offset our amendments to their draft, we will have to 'dress up'
our redraft to make it look as attractive as possible by inclusion
of as many small temporary concessions as we can think of that
will help Japanese to save face whilst at the same time not give
them substantial advantages if Japan eventually goes to war with
us.

It seems reasonable to assume that in putting forward the present
proposals Japan showed she at least hesitates in her present state
to embark upon a war with United States and British countries and
Dutch and wishes to play for time: that is to say she wishes to
postpone an irrevocable decision until a more favourable Axis
situation may develop in Russia, the Mediterranean or Europe, but
at the same time to at least stop drainage on her supplies of
essential commodities. Her insistence on the lifting of economic
restrictions supports this latter point. If we accept proposals
after substantial amendment it would presumably be because we too
are playing for time and feel we are likely to be in a more
advantageous position should Japan move later. The balance between
these advantages and disadvantages is difficult to determine. I
think it is important, however, to keep in mind that if we feel
time is on our side Japan also feels time runs in her favour, if
she can get alleviation of existing economic restrictions.

The British Ambassador [5] has expressed to me the view that
Japan's willingness to put forward proposals of this sort may mean
that she is in bad shape, and cannot contemplate [the test of] war
with United States and British Empire. However, he does not
[press] this and for myself I tend to agree with the Secretary of
State, that is to say I tend to [take] the present position
seriously and believe we cannot afford to gamble on Japan not
being ready to go to war if present negotiations fail.

The real danger at present seems to be from extremist element in
Japan going off the deep end and, without counting cost,
[plunging] us all into war rather than attempt to retrace their
steps. Suicide rather than surrender. If we can, through proposals
such as are now under discussion, give the Moderates in Japan
something to put forward as an argument I recommend most strongly
that we should do so.

I would be glad to have your instructions as soon as possible as I
believe time element to be most important.

CASEY